tv The Communicators CSPAN September 19, 2011 8:00am-8:30am EDT
this month look for congress to continue federal spending into november, including funding for recent natural disasters. keep tabs on the deficit committee as they formulate plan to lower the debt. it's all available to you on television, radio, online and on social media sites. search, watch and share all our programs anytime with c-span's video library. and we're on the road with our c-span digital bus and local content vehicles, bringing our resources to local communities and showing events from around the country. it's washington your way. the c-span networks; created by cable, provided as a public service. >> this week on "the communicators," key executives from sprint and the communications workers of america share their differing views on the impact of the proposed merger of at&t and t-mobile on the wireless industry, on the jobs of communications workers and be on consumers. our guests are sprint's vice
president for government affairs vonya mccann and the president of the communications workers of america, larry cohen. >> host: and this week on "the communicators," we have two guests to talk about the proposed at&t/t-mobile merger. vonya mccann, she is our first guest. ms. mccann, why did sprint file its own lawsuit against the merger even after doj filed its suit? >> guest: thank you. um, the department of justice, um, has, is very capable, and we have every confidence that they will prevail in court. but sprint has said from the very outset that this transaction would harm consumers and competition, and we filed suit to contribute our expertise and our resources to prove that the transaction is illegal.
>> host: also joining us here on "the communicators" this week is juliana gruenwald of "the national journal." >> host: so your decision to file the lawsuit, does that reflect any concerns with the justice lawsuit? >> guest: oh, no. as i said, the doj, if you take a look at their complaint, they have a very strong case, and we have full confidence in its ability to prevail. >> host: now, you mentioned some of the concerns that you and other critics of this deal have raised about it, citing competition, possible raising of prices, impact on innovation. but what impact do you think this specifically would have on sprint, on your company? >> guest: well, the main concern that we have raised both with the department of justice and with the federal communications commission is if transaction were allow today go forward, there would be two companies, at&t and the combined t-mobile
and verizon, and those two companies who are former bell companies would create a duopoly which could use its influence to damage sprint's business. they control critical inputs over which sprint and other wireless companies -- it's not just sprint -- these inputs we need to compete against them, backhaul, roaming and spectrum. by raising the price of those services to us, they raise our costs and costs to consumers. and that would damage our ability to compete against them. and we raised this as a big issue in the litigation. >> host: ms. mccann, you said for your ability to compete. is sprint competitive now with the two larger, at&t and verizon companies? >> guest: sprint goes out there and competes every day. i mean, it is -- we are a
independent and, um, aggressive competitor. but there are certain things that prevent us from being able to be as competitive as we would like to be, and one of those things is the bell, verizon and at&t's control over these critical inputs. they are able to increase those costs even today. so, yes, we compete, we are able to succeed in the marketplace, and we have been doing so, um, with increasing success over the last few years. >> host: about 55 million subscribers to sprint services -- >> guest: 52, yes. >> host: 52 million. um, is the marketplace viable for more than two or three -- >> guest: oh, my goodness, yes, we believe so. and we believe that the justice department believes that it can support more than just two
companies. look, in the beginning there was a duopoly. there was a -- when the fcc rolled out wireless services in the beginning, it was a duopoly, and congress and the fcc concluded that a duopoly did not serve the interests of consumers, that consumers were not getting choice, the innovation pace was slow, and, you know, the prices remained high. only business people could afford cellular services in the beginning. so congress and the fcc decided to make more spectrum available and provide it to independent companies, that's how sprint was able to enter the business. and after sprint and other companies entered the business, you began to see a lowering of prices, you know, a greater variety in handsets, more innovative services and plans. before there was just a plan. you pay, basically, the same
thing no matter which carrier you got under the duopoly. nobody wants to go back to those, to those days. >> host: t-mobile and at&t have said they would have a difficult time competing on their own if this merger doesn't go through. >> guest: at&t said they would have a difficult time? [laughter] >> host: no, t-mobile said they would have a difficult time if they don't merge with somebody. do you have a comment on that? >> guest: sure. t-mobile's profitable today. if you look at their 10k from 2010, they are enjoying healthy profit margins. i certainly belief that t-mobile is -- believe that t-mobile is able to compete. >> host: carrier subscriber. >> guest: yeah. so do other carriers. you know, that's called competition. we're taking competitors from each other, but as sprint has been able to turn that around, certainly t-mobile could do the
same. >> host: vonya mccann, would sprint be interested in combining with t-mobile, the third and the fourth largest mobile carriers? >> guest: i don't have any comment on that kind of speculative future activity, so -- >> host: do you think such a merger would have a better shot with the government, three and four instead of two and four? >> guest: i can't tell you what would be in the mind of the regulators. >> host: i want to ask you about the study that sprint commissioned on job, what you consider to be job loss. now, one of the reasons communication workers of america who we're going to talk to next is supportive of the at&t/t-mobile merger is because they say it will increase jobs, particularly cwa jobs. sprint says, no, that's not true. >> guest: it's not just sprint saying, no, that's not true. lots of parties that we had a consultant do a study that
proves that the underpinning of c work a's claims -- cwa's claims which at&t has picked up and repeated are totally specious, that the study is completely faulty. and if you look at the history of at&t and t-mobile over the last eight or nine years, t-mobile has been creating jobs while at&t has been eliminating jobs. so the study proves that the basis for the claim is just wrong, and then if you look at past transactions and what each company has been doing over the last eight or nine years, you'll see that at&t has been shedding jobs while t-mobile has actually been adding them. and if the merger were approved, we would anticipate that at&t, which controls, would be -- would continue its shedding of
jobs. >> host: son ya mccann, in the lawsuit sprint filed against this merger, one of the issues that you bring up is backhaul. what is backhaul, and why is that a factor in your view? >> guest: okay. most people don't know that the only part of the wireless call that's actually wireless is from your handset to the tower. everything from the tower on and pretty much the delivery of a call, is carried over wire line facilities. and a portion of those facilities are called backhaul because you're hauling the call back to a switching center, okay? so that's backhaul. those services are provided by the local telephone companies which include at&t and verizon. they are the two largest wire line telephone companies in the united states as well as the two largest wireless.
so their control over these backhaul facilities, um, significantly effects the price of wireless service. because they can increase our costs, you have to pay more for these services, and then we're not able to be as competitive as we'd like with our services to consumers. >> host: what if justice department were to impose conditions on the merger saying you can't raise the price on backhaul services, you must make deals on roaminging in accordane with the new fcc rules? i know you've said before you don't think any conditions can satisfy this, but have you guys revised your thinking on this? >> guest: we haven't revised our thinking, and more importantly, i don't think the justice department has revised its thinking. the head of the antitrust division said recently that the
department doesn't file lawsuits to settle. so i don't -- we are not looking for any conditions, and if you take jus us the at its -- justice at its word, and we certainly do, they are not looking to impose any conditions, their looking to block the transaction as a violation of the antitrust laws. >> host: can i just make a follow up? if they were to press forward, if they were to reach a settlement with at&t on this, would something like a condition insuring you have access to backhaul at a reasonable rate, would that lessen the blow for you guys a little bit on this? would it make it a little more acceptable? >> guest: in the antitrust world what you need to do is try to replace the competition that the transaction would eliminate, and just decreasing the price of backhaul for sprint and other independent wireless companies
would not replace the competition that taking t-mobile out of the market and creating a duopoly. really, it's the creation of a duopoly, two companies with 80% control of the market, t that kind of due wop -- it's that kind of duopoly that's going to harm competition. >> host: vonya mccann received her law degree from uc berkeley, has worked at the ntia, the state department and was a partner with aaron fox for a while. vonya mccann, what do you know about judge ellen knew vel who has this case? the case was assigned to her here in the d.c. district court. is that good, bad? >> guest: she's a very good judge, very smart, very efficient, and we look forward to bringing our case in front of her. >> host: and your case be combined with the -- will your
case be combine with the the justice department? >> guest: we filed our case as a related case, and we hope and expect that the two cases will be tried together. >> host: vonya mccann, does congress have a rolethis merger could -- if this merger would go through, could congress prevent it? >> guest: well, the case is in litigation right now, in court. and i think most lawmakers believe that once something has, lahrly a law enforcement -- particularly a law enforcement investigation, what this is. justice, the department of justice is rightly enforcing our nation's a antitrust laws to protect consumers. most lawmakers believe that once you hit this stage of the process, that it's for the courts to, for the courts to decide. and let the judicial process take its course. >> host: would sprint be okay if three major companies existed?
at&t, verizon and sprint? a trioply instead of a duopoly? >> guest: a trioply, is that a new word? [laughter] we, obviously, think that a monopoly is the worst. a duopoly is very close to it. i'm not familiar with the term trioply -- [laughter] but we believe a strong sprint, a strong number three is good for consumers, good for competition and good for the economy. >> host: and finally from me, you also include spectrum in your lawsuit, the issue of spectrum. how does spectrum figure in to your lawsuit against at&t/t-mobile merger? >> guest: well, one of the reasons at&t said it sought to acquire t-mobile was because it needed the spectrum to provide improved services to its
customers. but we've demonstrated at the fcc, and we think compellingly at the justice department, that at&t already has all the spectrum it needs to provide services to the vast majority of americans. it does not need to merge with t-mobile to do that. they're paying $39 billion and sending that offshore out of this country to acquire t-mobile when their own documents reveal that they could have paid one-tenth of that amount, one-tenth of that amount to rule out services -- to roll out services on existing spectrum to 97% of the u.s. population. their own documents prove that they don't need to acquire t-mobile. >> host: and juliana gruenwald, next question. >> host: since the next guest will be larry cohen with cwa,
they've been very critical of sprint, they've launched a web site called eye on sprint. they say sprint has been hostile to unionization efforts at sprint, so i just want to get your comment on some of their claims about your labor record. >> guest: well, this transaction does not involve sprint. we're not seeking to acquire another company. now, our labor record is very good, and very comfortable -- and i'm very comfortable with it. we respect the right -- we respect the law and the right of workers to choose. but cwa is looking out for its own members, as you would expect it to do, and not jobs as a whole. and if you look at the jobs study, the jobs study shows that, um, the number of workers that could lose their job if this transaction were approved is far greater than any benefit that cwa as a union might
receive. >> host: is that jobs study available on your web site? >> guest: i believe it is. but if it isn't, we'll make it available. >> host: and on our web site at c-span.org/communicators is the sprint lawsuit against the at&t/t-mobile merger if you want to read that. again, c-span.org/communicators. vonya mccann of sprint, thank you very much. >> guest: my pleasure. thank you. >> host: juliana gruenwald of national journal, what did you hear from vonya mccann of sprint? >> host: well, she and other critics of this merger have said they've never seen a merger that doesn't involve loss of jobs for workers. so my question for you is, why are you supporting this deal? >> guest: well, first of all, as you may have talked about with her, i'm not sure, at&t committed that all call center work and the level of employment at all the call centers at both companies would continue
postmerger. this is a huge commitment. sprint, for example, contracts out most of its call center work. much of it offshore. secondly, at&t said to the the extent there's synergies, for example, which is the biggest call center in wireless, they would cut the offshore work first, they would only cut the offshored work. so between t-mobile which has been offshoring and some at&t work which is offshoressed, that work would go, and in addition they would cut enough offshored work to bring 5,000 net jobs back to u.s. call centers which in this industry is huge. so, again, the trend in the unorganized part of this industry like sprint is contract every job that moves. sprint has contracted out its engineering work, its plant work, has very few stores that are company owned relative to the other companies, so for starters we have 5,000 net jobs, and for starters we stop the
contracting out and offshoring of the t-mobile customer service work. so these are two gigantic things right from the beginning in terms of jobs in this merger. >> host: how much is call centers -- what's the portion of workers -- >> guest: about half, i'm sorry. >> host: about half at both companies? >> guest: yeah. >> host: okay. >> host: so, larry cohen, how would this merger, though, benefit consumers? wouldn't competition be lessened when this -- >> guest: so, yeah. number one, this is the fcc job, is you put -- and we support this merger with conditions, the cwa's role to go back to the question, with conditions. so in terms of consumers, number one, is the buildout. to rural america which the president talked about in the state of the union which the fcc had in their broadband plan. the main way you're going to get high-speed internet which is 10 megs down or more which is what
we would call high speed. right now rural america is lucky to get one. the only way you're going to get is wire rest. in this country nobody's building out wire line to rural america. so at&t was prepared as a condition -- this is in writing, not some kind of promise -- to say we will reach -- and, again, this would be up to the fcc -- 97 or 98% of all households with 10 meg service downstream, i think by 2014, it might have been 2015. that buildout to our consumers, the people in rural america are consumers, not just those who live on wall street and have many, many choices. and the choices right now in a state like west virginia, the broadband maps that we've been doing for years that we've talked about here "the communicators" in the past, now the fcc is doing them so they're even more complete. the service in a state like west virginia, the entire state is, you know, almost nothing in
terms of high-speed internet. verizon dumped all its wire line to a company called frontier, and on the wireless side there's no high-speed internet in west virginia. the idea that at&t would have to make commitments like that as a condition of the merger is absolutely critical for consumers. now, on price issues, you know, that's the job of the fcc. and they've done it on other mergers, wireless and wire line. for example, when at&t merged with bell south, there was a commitment in terms of price and in terms of wire line buildout in rural southeast u.s. so these, this is the fcc part of the deal is to slap conditions on in terms of what actually happens to consumers as opposed to, you know, the antitrustish shies that the justice department -- issues that the justice department is focused on. >> host: let's go back and clarify again what the promises that at&t has made to cwa regarding jobs, and are those in writing?
what are the guarantees you have -- >> guest: yeah. i would be as cynical if they were only to the cwa, although we have lots of faith in what they say. but, no, these are written commitments that they've made in writing that on the call center side, the biggest single place where in terms of front line jobs across america, these are the big locations in the wireless industry. this could be call centers, like there's a t-mobile center in rural maine, oakland, maine, with 500 job. those people are fighting for their jobs, in fact, the workers themselves were outside yesterday in a press release about jobs being cut there. at&t is saying no jobs cut in any of the centers, none, and stop the offshoring. and in addition, they will bring back 5,000 by cutting -- they'll probably cut more than 5,000 jobs in asia, but there'd be a net jane of 5,000 call -- net gain of 5,000 call center jobs in the u.s. that's a huge shift in terms of what's happening in this
industry, particularly what sprint has done, what t-mobile is doing right today in this industry which is competing by cutting costs. and this is a huge reason why the u.s. economy is in the toilet. big companies that are profitable compete by cutting costs, not by raising revenues. and how do they do it? they cut workers, they cut jobs, they cut the pay that people have by contracting out, they eliminate health care, pensions, and then we wonder why, you know, people don't buy anything. they're not buying anything because they're either not working, or they're seeing their standard of living fall, so they're going to buy less. so that is one of the benefits of this merger from the oint of view of working -- point of view of working americans. >> host: conditions on mergers usually only a few years, you know, four or five. what would, what would you expect as far as these conditions, these written assurances? how long have they said they won't offshore call center work? >> guest: yeah. i think that's key, and one of the keys in general that you just hit on from my point of
view is that we need to, you know, do check-ins on mergers. not just this one, but all mergers, you know, what has happened with the commitment. so, you know, in the communications sector what's happened in puerto rico? was the buildout done or not? what's happened since verizon spun off fair point, i'm sorry, spun off their wire line in vermont and new hampshire and maine to fair point? and they went bankrupt. what's happened with the commitments that were made? you're absolutely right, there needs to be check-ins, they should be done regularly, and whether it's the fcc or a different agency depends on what kind of a merger it is. there needs to be check-ins, otherwise what's the point be of the regulations? >> host: how long do you want these conditions -- >> guest: well, if i was the fcc i would be talking to them about, you know, how is the customer service work going to be done in terms of jobs and get
those commitments, you know, in terms of the percentage of the work, you know, on an ongoing basis. we don't have an ability at cwa to do that in this case. or similarly in the broadband buildout and on price, i mean, it's a question of, you know, what they ask for as conditions for the merger to be approved. >> host: larry cohen of communication workers of america, if this merger does not go through, if doj prevails, what happens to t-mobile? the. >> guest: yeah, that's really a critical question. first of all, i'm not sure if vonya discussed this or not, but sprint wuss in the process of their -- was in the process of their own deal. nothing against dan hesse, great guy, but a piece of this is sort of a jilted suiter. and the at&t deal, because it was priced higher -- because the synergies are much greater, sprint has other incompatible technologies they're trying to deal with now, this would be the fifth one, so the at&t deal was
a better one, and it interrupted that deal. the way the justice department has written, you know, in their press releases, you know, whatever, they've talked about keeping four companies. you know, that is not going to happen. and i think everybody knows that t-mobile as it exists, the chairman in a congressional hearing, the chairman of deutsche telecom who owns 100% of the company says we don't have the next ten billion for fourth generation buildout. we don't have it, we're not going to do it, we're a multi-national company based in germany. our first priority is to do fiber buildout in germany. and t-mobile is 31% owned by the german government, by far the largest owner. and so as it should be, that's where their priorities are. here we have a chance to bring back spectrum to a u.s. owner and, again, in our view the justice opportunity's taken an incredibly narrow view. this is not a static industry. the value of it goes to zero if
you don't go to the next technology. so imagine, for example, now if there was no data service. yeah, sure, there are some customers that'll prepay just for voice, but it's the same thing. if you you don't go to 4g and have genuine high-speed wireless where people can download big chunks of data relatively quickly, you may as well not have a company. so they can't mandate that kind of investment from deutsche telecom. that's the contradiction in this. the other piece would be when it was bought ten years ago, there's a big green light up in the u.s., invest here. how do you put a green light up to invest here and then say you can't sell? that's essentially what they're doing. because if goal is to keep four companies, that means the sprint deal would be dead as well. so what is deutsche telecom supposed to do when they don't want to invest the next $10 billion here? big problem. >> host: by the way, the communication workers of america has written quite a bit on their web site about this proposed
merger and their support of it. you can find that at cwa-union.org. juliana bruin wald, next question -- grunewald, next question. >> host: on the day the justice department filed its lawsuit which was the same day at&t announced the 5,000 jobs commitment, you guys said the lawsuit was simply wrong. can you explain what justice got wrong in their lawsuit? >> guest: yeah. so many key points are the ones you've already raised, but it's the difference of a dynamic versus a static industry. so in addition to 4g being the norm, you have the over-the-top services as we would call them. microsoft spent $8 billion and butte -- bought skype. skype interrupted the service provider, and there's hundreds of local service providers which they also skipped over, and grabbed the foreign traff